MINUTES
REGULAR JOINT MEETING OF THE BOARD OF TRUSTEES OF THE POLICE & FIREMEN'S PENSION FUND
& THE BOARD OF TRUSTEES OF THE CITY EMPLOYEES RETIREMENT FUND
May 6, 2013
A REGULAR JOINT MEETING of the Board of Trustees of the Police & Firemen Pension Fund and the Board of Trustees of the City Employees Retirement Fund was held on Monday, May 6, 2013, in the City Hall Auditorium.
Those in attendance included Mayor Ryan J. Bingham, Corporation Counsel Raymond Rigat, City Treasurer Arthur Mattiello, members of the Board of Trustees of the City Employees Retirement Fund Gregg Cogswell, Elinor Carbone, Gerald Zordan, Marie Soliani, Drake Waldron, Paul Samele, Nancy Michna, John Schnyer and David Prahm, and members of the Brd. of Trustees of the Police & Firemen Pension Fund Darlene Battle and Ray Drew.
Members Angelo Alduini, Gail Sartori, Angelo LaMonica, James Potter, Christopher Cook, Richard Zaharek, Douglas Benedetto, Michael Emanuel, Oscar Segui, Michael Soliani and Edward Delisle were absent. Anthony Tranghese of Fiduciary Investment Advisors, LLC was also present.
Mayor Bingham called the meeting to order at 6:30 p.m.
Presentation: First Quarter Results
Mr. Tranghese said equity returns in the U.S. were very strong in the first quarter, and the market has recovered 100% from the 2009 lows. The one negative was the emerging markets index which was down 1.6% in the quarter, he said, stemming from concerns about growth in China. Mr. Tranghese noted that the ten year treasury figures are close to historically low levels, creating a challenge in our balanced portfolio.
ALLOCATION
Mr. Tranghese reported that at the end of the quarter the City Employees' portfolio contained 32 ½ million dollars, and the Police and Firemen's portfolio was at 46.2 million dollars, with sound growth in both. He said they are both very well diversified across many segments of the investable universe, with one difference being the 2.2 million dollar cash balance in the City Employees' which is larger than normal because there were pension distributions that needed to be made near the end of quarter. That cash balance is no longer in the portfolio, he said and allocation percentages are very similar in both plans.
PERFORMANCE
Mr. Tranghese said both portfolios were up a little over 5% in the quarter, up a little over 10% during the last 12 months and annualized a little over 8 ½ % over the last three years since the portfolios were put into place in October 2008. He said there are strong returns across the board, which is a benefit of good timing when the portfolio allocation monitoring process was started.
MANAGERS
Mr. Tranghese stated that all three fixed income managers had a very strong performance in relative terms, with sound performance over the last 12 months. He said the equities managers came very close to matching their benchmarks in the quarter, but noted that Mainstay is on Watch status due to one of the three portfolio managers announcing his retirement. He said he is cautiously optimistic as there are positive signs, and will report on this in the future.
Mr. Tranghese cautioned that Boston Trust Small Cap Fund lagged behind in the quarter because their portfolio is comprised of higher quality companies. He said riskier stocks do better than safer companies in the small cap space in an environment like last quarter and although they are never pleased to see managers underperform, in the case of Boston Trust it is completely understandable. Some patience with that manager, he said, will be rewarded by investors.
All three international equity managers did very well in outperforming their benchmarks, he said, as they took advantage of opportunities created by large swings in market movements overseas, particularly in Europe.
Mr. Tranghese reported that real estate has added a value of 18.7% but they lag their bench-mark in the quarter. He said the inflation protection sleeve has done well over the last year at 5.7%. He explained that resource-related global hard assets have been a bit of a drag as we see commodity prices come down. He said FIA thinks that in time we are going to be dealing with an inflationary environment where these investments will do well, rapidly.
CONCLUSION
Mr. Tranghese stated that the portfolio is very well diversified across a number of asset classes that are complimentary across a number of individual managers, that are also complimentary in style and nature, and he has no recommendations for changes at this time.
Mayor Bingham asked if there will be any recommendations for changing Mainstay's watch status earlier than next quarter. Mr. Tranghese said the likely scenario is that we'll keep them on watch through next quarter, and that we remain cautiously optimistic.
ADJOURNMENT
On a motion by Councilor Carbone, seconded by Councilor Waldron the meeting was adjourned at 6:41 p.m.
ATTEST: Joseph L. Quartiero, CMC City Clerk |
Respectfully Submitted, Carol L. Anderson, CCTC Asst. City Clerk |
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